Daily Report 250914 2014-09-25
Macro Economy
After three straight slumping, the United States stock market rally. The S&P 500 Index rose 0.8% to 1998.3 points, which is the greatest gain since August 18. It is impacted by the rise of home sales to a six-year high, and the rise of health-care stock and commodities consumer stock. The United States on August new house sales rate surged to 504000 sets, jumped 18% month-on-month, which is the highest in nearly six years. It suggests that America's housing recovery is still in orbit, according to data on last night. Although existing home figures released by the early is not ideal, the steady trend of real estate market recovery further has been increasingly strengthened.
German IFO business climate index in August slump by the fifth straight month, and fell to 104.7. It accelerates market worries about the growth prospects. European Central Bank President Mario Draghi said that Euro deflation fits with the differentiation of the monetary policy around the world. Monetary policy is going to maintain loose for a long time, in response to the Eurozone deflation risk.
Domestically, Prime Minister Li keqiang requires completing current accelerated depreciation of fixed assets. By reducing the tax burden, to speed up the enterprise equipment updated, science and technology research and development innovation, support small and medium-sized enterprise innovation. The speech shows that the government is still in advancing reform measures to help small businesses more competitive, and strengthen scientific and technological innovation, sustaining economic development and vitality, but obviously improved short-term still did not see the real economy, the reform of labor still exist and will continue.
On Wednesday, LME copper market edged up, and closed up $34.5. American new home sales rate in August is 504000, which hits the peak since May 2008. It is far beyond the expectation of 430000. The better-than-expected new home sales data somehow underpinned the copper price. In addition, recently Chinese good manufacturing data also supports the market. In consideration of seasonal factors, we should pay more attention at the continuity of data.
Fundamentals, LME spot premium has a sharp slump of $12 to $36.5; inventory level increased 4000 tons to 156000 tons. Domestic spot premium dropped RMB 110; quota on Wednesday has a discount of RMB 40 to premium of RMB 90. Every other month spread is from RMB 400-500. Shippers are strongly risk aversion, and rush to sell out current inventories. Hence they take the initiative to cut premium. The downstream rarely gets into the market. There is no sign of stocking up before the national holidays, which appears thin market.
The supply side, on Wednesday the world’s largest copper BHP’s Escondida copper mine strike for a second day as planned. Focus on the time of labor disputes finally being solved. Newmont mining said on Monday this week will be back to the Indonesian export copper concentrate, and to raise copper production 30000 tons this year. It will increase from previous 80000 to 95000 tons to 120000 to 125000 tons. The recent price drop is too fast, short-term will be under adjustment. We wait for the short selling opportunities after prices rally. Short term focus on the effectiveness of the LME resistance at $6800, domestic copper resistance in December is RMB 48300. Next Wednesday is national holiday, be prepared for it.
On Wednesday, LME 3-month Aluminum indicated as reaction, and closed at $19745/ton, up 0.59%. New home sales data for August in the United States looks quite good. Monetary policy is going to maintain loose for a long time, said by the European Central Bank president. Prime Minister Li keqiang requires completing current accelerated depreciation of fixed assets. Beijing put forward the residents & affordable housing.
Industry, by the end of this year the global aluminum market will have a shortage of 1.5 million tons, suggested by Rusal CEO. It would adhere to run of mine ore export ban, said by energy minister of Indonesia. Pay attention to Shanghai aluminum within RMB 14000 to 14200. Short term may have long positions.
                                                                                                                   Dong LV (Investment Certificate NO. TZ008452)